First Majestic

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#1 Thu, Jan 2, 2020 - 6:35pm
silverseeker
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First Majestic

I'd like to open this thread and list a few catalysts for 2020. I am hoping there will be many additional posts with further details, and I look forward to reading this convenient rolling discussion!

In reference to the recent Seeking Alpha article and Keith's interview; after which I spoke with Mark Corruthers, (Investor Relations); and we reviewed some of the slides in the Nov 28th Corporate Presentation.

  • First Majestic is now over 90% Precious Metals with San Dimas and Santa Elena producing 20 Million AgEqvOz @ ~ $7.00 AISC.
  • Gold production is now over 30,000 ounces a quarter. If you are a long term shareholder, you know this was never the case up until the San Dimas and Santa Elena acquisitions. How many Gold Mining juniors are diluting shares as we speak to raise cash for a 120K ounce/year gold mine operation? I don't think 'the market' has priced this in. If Gold only hits $1600 and Silver $22 this year; you are looking at > $300M in free cash flow or ~ $30/share at ~20X multiple. The decade long chart is going to look pretty insane.
  • First Majestic shares are held in a large proportion of mining mutual funds and as a premier 'Primary Silver' leverage stock. If the sector sees inflows, AG shares are bought both directly and indirectly.
  • First Majestic owns all the land surrounding the Silvercrest Las Chispas project. Refer to pages 23-24 of the presentation. Note the drill results down near the Santa Elena Mine @ Ermitano are very similar to many of the 'world class' intercepts published by Silvercrest but First Majestic has yet to publish an initial resource model. Four surface drill rigs were active at the Ermitaño project during the last quarter. In addition, above ground earthwork activities began to prepare the area for the installation of surface facilities and portal construction. The Company is expected to release a Preliminary Economic Assessment study and updated Resource estimates on the Ermitaño project by the end of the first quarter in 2020.
  • First Majestic also has an exploration drill on the Los Hernandez claim, along the Las Chispas property line... First Majestic does not need to drill off a resource to raise cash to build a Plant up there; as Silvercrest is already preparing to build one. I do not think there is any danger of First Majestic 'hollowing out' their resource base... just highlighting the untapped potential of one of their producing properties and the obvious potential for another acquisition.

The above is clipped from recent press releases. I didn't include any of the cost saving operations; such as the new HIG mills and switch over to NatGas and roaster work at La Encantada. Sometime during the 2020s decade, I believe Silver can rally to > $100/ounce, and AG shares can 2:1 split and likely still reach > $100/share... a 20 bagger for the 2020s.

That's my opener, and kick off for the decade.

killing the banker Ponzi one ounce at a time

Tue, Jan 21, 2020 - 11:02am
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disappointing production news

Tue, Jan 21, 2020 - 12:19pm TF
silverseeker
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Transformation of the company

Hi Turd,

They hosted a conference call at 11am, which is available on the website.

I am actually very pleased with the decision to wind down Del Toro operations, which was their last small scale mine from early days. This completes the company transformation into three major mining operations with a tightly focused capital and development program for 2020. First Majestic is now a nearly 100% pure Silver play with >100k ounces/ year of Gold by-product credits.

Rather than spreading capital around to a now extensive portfolio of boutique scale operations, they can switch to proper green field development of these assets if the Silver price rises without burning up the operations at near break even prices.

I see in the 2020 guidance a mention of Los Hernandez drilling, which is AGs land package surrounding the Silvercrest project. If you look at the vein system Silvercrest is drilling presently, it seems a healthy speculation that those veins are running right onto the Los Hernandez property, which is totally under the radar. If you look at the Gold contained in the Las Chispas drill intercepts, it amazes me that the market isn't looking at the district area potential, which is owned by First Majestic, yet not reflected at all in the valuation.

killing the banker Ponzi one ounce at a time

Mon, Jan 27, 2020 - 5:58pm
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Here are some key points I

Here are some key points I took from the call

<< Over the last couple of quarters, we've been very, very lucky and have had some great grades and that mine has been making some substantial profits in the last couple of quarters. But in 2020 we're being a little bit conservative. We've dialed back the grades a little bit and also dialed back production a little bit. So that's why it looks like it's slightly higher cost, because it's just us being conservative. Of course, the geos and all the engineers inside her are hoping to maintain Q3 and Q4 grades, but when it comes to public disclosure and guidance, we have to shy upon the conservative. >>

Sounds like they are erroring on the safe side with regards to the ASIC and grade.

<<Another thing that investors and shareholders should know is three years ago we had seven mines operating. And as we had very successful acquisitions of our two last purchases, the Santa Elena and San Dimas mines, those two mines are really generating the majority of the production and most of the profits and it just makes business sense to really focus our efforts on those two mines. And unfortunately, the smaller mines which were producing only really around 1 million ounces or less each, insignificant really in the whole scheme of things, it just didn't make sense to continually pushing silver out of those mines and losing money on those ounces. >>

Check out that last sentence. . They were actually losing money from those small mines! Those small mines must have poor grades. They will probably bring it back online once the silver prices are higher. The market did not like the lower guidance on ounces produced but it makes sense to stop production. Would the market like more ounces but less profibility? That's the reaction in the share prices but it is the wrong reaction. There is no reason for First Majestic to get hammered for being prudent.

Wed, Jan 29, 2020 - 6:20pm bruinjoe
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2020 Guidance

Good summary Bruinjoe.

I recall during 2009-10; AG was bringing La Encantada on line to double Silver production just as the Silver price started to rise. Their stock value rocketed, allowing additional acquisitions, etc. I expect they will do this again during the next Silver Bull market, and will have these smaller operations properly drilled off and ready to capture the leverage to a rising Silver price. Concentrating on their Silver/Gold operations in 2020 and maximizing efficiency will set the table for the next decade.

If Silver lags over the coming months, adding shares with a multi-year view will likely yield multi-bag returns as this stock usually leads the sector higher.

killing the banker Ponzi one ounce at a time

Tue, Feb 4, 2020 - 10:25pm
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Keith Neumeyer- Mining CEO of the Year

Kitco News- Mining CEO of the year

Congrats to Keith and First Majestic. I bet Keith was pleased to see Silver mentioned as a 'conviction buy' at Davos.

You can imagine some accumulation is occurring the last few days...

killing the banker Ponzi one ounce at a time

Sun, Feb 16, 2020 - 5:11pm
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New SGTReport interview with Keith Neumeyer

Link: Sgt Report Feb 16th w Keith Neumeyer

Keith mentions he is buying physical Silver regularly and just added 200 Silver Maples... How many mining CEOs actually 'walk the walk' like Keith?

He also provides some good details on First Mining Finance, with Sean asking several great questions. Due to the now sustained increase in the Gold price, lower grade ore is economic and therefore getting mined; even by the so called 'Silver' primary producers (AG included), while conversely; near break even Silver pricing is reducing Silver mine exploration; certainly a precursor to the dynamics now persistent in the Palladium market.

Reap what you sow: the Silver industry is not likely able to bang out a ton of new Silver; even if prices rise rapidly and a rabid monetary demand component appears.

killing the banker Ponzi one ounce at a time

Mon, Feb 24, 2020 - 9:47am
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High grade Gold- Drill results @ Santa Elena

Link: drill results press release

Some of these intercepts turn this deposit into a Gold mine with Silver byproduct credits. Updated resource calculations anticipated, infill and development drilling continue. Recall mine feed from this deposit is going to replace tailings blend/reprocessing, and significantly boost overall production starting early next year.

killing the banker Ponzi one ounce at a time

Mon, Feb 24, 2020 - 12:48pm
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Response from First Majestic

I posted this information in today's main blog also. I'm posting it here for so that FM investors have this information in case they missed it in the blog posting.

----------------

I posted a question to First Majestic and got a very quick response from them. Props to that company. I got permission from First Majestic to share their response.

My question to First Majestic:

Hello, I am a shareholder and member of the tfmetalsreport.com. Many members of this site are holders of First Majestic Silver. We are appalled by the markets reaction to the current quarters earnings announcement. The press release was very impressive but the market did not react well to it. Upon deeper inspection the market seemed to take one data point above all others. That was earnings. The market was expecting 4 cents per share earnings instead of the 0 cents per share earnings. Why was there such a large difference? Did management not communicate to the investment community to align expectations with operations. Thank you for your time.

First Majestic's response:

Hi John - thanks for your support as a shareholder and member at tfmetals.

In short, we had to book a $6.8M income tax in Q4 (non-cash) related to the old stream on San Dimas. The market was not expecting this and quite honestly neither was the Company but the auditors fought us and ultimately won.

Without that, the earnings would have come inline with expectations.

As you likely saw the following day, smarter heads prevailed as the stock rallied back.

Hope this helps.

Mon, Feb 24, 2020 - 2:27pm bruinjoe
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Thanks bruinjoe

They are frustrating. I keep telling myself to take the 5 year view. It's hard. Your note was helpful. Cheers.

Wed, Feb 26, 2020 - 10:21am
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The 58,7 mln impairment on

The 58,7 mln impairment on the La Encantada roaster project is a far bigger deal than the tax issue imho.
Mon, Mar 2, 2020 - 9:54am
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GR Silver Mining Signs Definitive Agreement with First Majestic

Nice monetization of a non-core property.

  • First Majestic gets 19.9% of GR Silver shares over next 2 years, a 2% NSR with $1,000,000 for 1% option buyback; and $100,000 cash payment.

Yahoo Press release: GR Silver purchases Plomosas Silver Project

Terms of the Acquisition

GR Silver and First Majestic, together with their respective Mexican subsidiaries, have now signed a definitive binding Share Purchase Agreement ("Agreement") pursuant to which GR Silver, through its Mexican subsidiary, will acquire 100% of the issued and outstanding shares of Minera La Rastra S.A. de C.V. Minera La Rastra owns 100% of the Plomosas Project which is described above.

Pursuant to the terms of the Agreement, the purchase price for Minera La Rastra will be comprised of: (i) a $100,000 cash payment; (ii) the grant of a 2% net smelter return ("NSR") royalty on the Plomosas Project with half of the NSR (i.e., 1% NSR) being subject to a buy-back option for US$1,000,000; and (iii) the issuance of that number of common shares of GR Silver as is equal to 19.9% of the total issued common shares of GR Silver (calculated after giving effect to the issuance of such shares) (the"Purchase Shares"). The Purchase Shares will ultimately be issued to First Majestic on the closing date. The Company currently has 68,669,391 common shares issued and outstanding. Assuming no further shares are issued prior to the closing date, the Company will issue 17,067,639 Purchase Shares to First Majestic, resulting in a total of 85,737,030 shares being then issued and outstanding.

killing the banker Ponzi one ounce at a time

Thu, Mar 12, 2020 - 10:19pm
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I'd like to buy FM shares

Hello mates,

I'm a longtime member going back to the Watchtower days and have been waiting for a good time to invest in my first miner. I expect to hold long term. My dilemma is that I have no idea how to acquire shares or in what blocks they are sold. I do not have a trading account and not sure where to begin.

Would someone be willing to school me a bit?

Thanks to all

Wed, Mar 25, 2020 - 5:07pm eyeswideopen
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Purchasing First Majestic shares

Hello eyeswideopen,

If you are a US Resident from Florida, there is a multitude of brokerage companies at which you can open an account. I have used Fidelity since early 1990's so I cannot recommend any one in particular... but many now offer low initial balance to open an account and 'zero $0.00 trade commissions' when you buy/sell a US listed equity or stock.

If you own zero stocks; maybe a mining stock would scare you- they are very volitile as investments; you are speculating on a future outcome with many variables... there is no assurance or insurance against total loss!!!

That said; if you want diversity; there are many relatively stable EFTs or funds that hold small % of many mining company shares and track the entire mining sector, or target 'Silver' or 'Gold' mining stock specifically. 'GDX' or the 'HUI' are examples that Turd speaks of often. These offer 'Beta'; which means they will generally track the average investment return in the sector; and there are dozens of these tracking symbols to choose from, depending on where in the sector you want to concentrate: large cap major producing mines, or small growing junior mining companies?

If you are looking for a lottery ticket and more risk; then single company issued mining shares such as First Majestic may offer 'Alpha'; which means the company may have specific performance characteristic that offer outperformance relative to the sector as a whole- both UP or DOWN...

First Majestic trades as symbol 'AG" on the New York stock exchange. You can purchase as little as 1 share at a time. On First Majestic website presently; there is an article describing one investment firm's view on AG as an investment:

Many 'investment' firms pump and dump stocks; so these types of 'research' reports can be misleading... Many here at TFMR view First Majestic very favorably with great management and prospects; so a good long term hold trading presently at favorable valuation as a long hold. There are MANY MANY other choices: Consider Franco Nevada as a premier royalty company; or Wallbridge as an exploration speculative play in Gold...

All said, I am no investment advisor; but you won't likely find any meaningful investment advice on mining shares from a brokerage firm! Study here at TFMR if you want to self-direct and dabble, or seek a professional company like Sprott Asset Management if you want guidance and management assistance of your account.

Good luck and there are many folks on TFMR with excellent advice!

killing the banker Ponzi one ounce at a time

Wed, Mar 25, 2020 - 5:39pm
eyeswideopen
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Thanks for the response

Not looking to speculate randomly or take a flyer on anything and am aware it's a volatile space. It's likely a one time purchase so I thought about having a broker place the order. I know the community supports Keith and I also like the cut of his jib. I've followed the story and have seen interviews over the years. I like that it's a pure silver play, that they seem to have invested in the infrastructure, and that they have pared down less profitable (unprofitable) activities. Closures due to the current environment are a concern ( I just saw the Kitco interview), but I'd be in in for the long haul. I've been considering purchasing a block for awhile and this appears to be a decent time to enter. It's an investment I can afford to lose, but believe AG is going to have its day sooner rather than later. I left a rambling over at Palin's awhile back. Miss that group, but if metals rally we may see some activity over there.

Thanks again. Be well

Mon, Sep 21, 2020 - 7:18pm silverseeker
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Non-cash considerations

Recall March 2nd press release:

  • 17,067,639 GR Silver Shares(19.9% of float) to First Majestic, along with a 2% NSR for 100% interest in First Majestic Plomosas Project.

March 2nd GR Silver stock price: 16 cents USD
Sept 21st GR Silver stock price: 49 cents USD

It will be interesting to see the quarterly report; as non-cash items have appreciated significantly. Just the above transaction; (one of many); has tripled in value. If you review their portfolio of producing and non-producing properties; First Majestic is a Silver mutual fund of prospects; each with significant M&I resources that have not been revalued with Silver > $20/ounce.

killing the banker Ponzi one ounce at a time

Tue, Sep 22, 2020 - 11:27am
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Further activity - First Majestic as a Silver 'Mutual Fund'

Link to news release- AG receives 14.9% stake in Silver Dollar

AG now owns 16.4% of the company, with additional 5% coming if Silver Dollar executes the full option on the La Hoya property. These 5,146,401 Shares will be another non-cash asset added to First Majestic's balance sheet; with present market value of approx $9 Million CAD.

Eric Sprott holds 19.9% of Silver Dollar shares. First Majestic will join Sprott holding 19.9% interest, and also a 2% Net Smelter Royalty on La Hoya.

First Majestic is monetizing idle Silver resources via these option agreements, and retaining significant upside should these Juniors execute on the option agreements.

killing the banker Ponzi one ounce at a time

Sat, Sep 26, 2020 - 10:38am
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Comment on the Mexican Tax issue

AG has $195 million in cash per their Sept 17th update corporate presentation.

There's around 35 million shares short per page 30 of the presentation; charting the short interest over the last ten years.

If Silver gets beaten down any further in the weeks ahead... I plan to make additional 2022, 2023 Call option purchases. The Tax issue will not drag beyond mid 2021; and several of the catalysts discussed in this thread will have kicked in.

Few people evaluate AG stock as an exploration play... but that is a fundamental oversight. They own all the land on trend surrounding the La Chispas claim held by Silvercrest... look at the Ermitano Project drill results on page 21 of the presentation. This goes into production early 2021!

killing the banker Ponzi one ounce at a time

Thu, Oct 8, 2020 - 12:20pm
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Options Premiums coming down

I have been monitoring the long dated options premiums over the last month; and the premiums have been coming down. I just rolled a few expiry July 2021 Calls out to Jan 2022, and got almost identical premium pricing for another six months time.

I had hoped the tax issue would be resolved by now; but the fact it remains has likely impacted the long dated options at a lower premium... so getting them for no net premium cost is a great buy. I'll speculate Q3 numbers will look good and Q4 better, with 2021 bringing some major milestones into play; including a settlement of the tax issue.

I am staying conservative on the Calls; buying the Jan 2022 C7s which offer over 2X leverage to my shares and a damn low premium over current share price.

Maybe November will be a shit show, maybe not... but I am speculating there will be a rally in the Silver price well above $40 before Jan 2022; and AG initial target of $20/share seems extremely conservative.

killing the banker Ponzi one ounce at a time

Sat, Oct 10, 2020 - 9:38am
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Sprott weekly wrap up comments 10/9/2020

Eric and Craig mentioned Silvercrest's Las Chispas project during the conversation; and how; in spite of what seems a 'rich' valuation on the stock; they are still adding to grade and resource beyond what the market is presently valuing...

An example is this SilverCrest Aug 13th press release; which taken out of context would seem like a 'glory hole' drill result:

  • Babi Vista Vein Takes Centre Stage, New Record Drill Hole: 1.7 Metres Grading 635 gpt Au, 26,004 gpt Ag or 73,595 gpt AgEq

However, if you look into the last 12 months of drilling results over several press releases; you realize as Eric is saying; that there is a swarm of narrow but extremely rich veins of this grade over a very compact footprint; making the gross 43-101 a challenging calculation in process; but the actual future mining composite resource extremely profitable.

This is an example of why First Majestic has focused more on production drilling to guide current mine development versus exploration drilling during the last several years. Their acquisition of SilverCrest's Santa Elena mine; and now the development of the Ermitano deposit demonstrates a very rapid capitalization of similar grade vein ore bodies for which 'the market' has offered zero value. As example from Ermitano:

  • Hole 16-04: 9.9 metres grading 1,209 g/t AgEq • Hole 18-47: 13.0 metres grading 547 g/t AgEq • Hole 19-91: 13.0 metres grading 1,003 g/t AgEq

Very few stock market whores do any research these days. Look at the grade and width of these intercepts. Follow Eric Sprott's advice and front run these chimps. Silver at $30 or $50 an ounce; and with First Majestic ramping up production and development work with cash flow... Everyone wants a 10 bagger; and I see one right here.

Edit>>> Just to help with the above... the 'AgEq' number is the composite of the intercept grade per ton measured of both Gold and Silver contained within an intercept length;(there is no other by product metal assayed in this ore).

  • If you wanted to convert this # to 'AuEq'; to wrap your brain around the result in Gold only; you could approximate via use of the present Au:Ag equivalent price ratio of 77:1; so Hole 16-04: 9.9 metres grading 1,209 g/t AgEq equates to 15.7 g/t AuEq over 9.9 meters.
    • Now... what if the Au:Ag ratio drops to 30:1? This would be 9.9 meters grading 40.3 g/t AuEq. The market is missing the potentiality of the impact a dropping Gold:Silver price ratio can have on a Silver mine.

killing the banker Ponzi one ounce at a time

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